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Brazil’s Billionaire Problem

To understand global inequality, you have to understand Brazil's inequality.

Mario Tama / Getty Images

Just over two years ago, in April 2014, Thomas Piketty’s Capital in the Twenty-First Century was published in English and took the top spot on the New York Times bestseller list. Piketty’s book struck a nerve, helping to disseminate several ideas—among them that capitalism doesn’t automatically generate a reasonable or equitable distribution of income and that paying attention to the wealthiest 1% is necessary to understanding politics. Piketty focused on the concentration of wealth in 19th and 20th century France, the U.K., and the United States, places where the most data was available for those periods. But if Piketty had been—instead of an economist—a reporter working to understand the world that extremes of inequality have made today, he wouldn’t have looked at those rich countries. He might well have chosen to focus on Brazil, as Alex Cuadros has done in his new book Brazillionaires.

Spiegel & Grau, 368 pp., $28.00

Cuadros, a reporter for Bloomberg, arrived in Brazil in 2010 with a Piketty-worthy mission: to investigate the lives not of the 1% but of the 0.0001%. Part of his job was to rank Brazil’s billionaires on Bloomberg’s global wealth list—a kind of “U.S. News and World Report” rankings of the superrich—as well as to report on their business deals and their personal lives. In Brazillionaires, he has consolidated and shaped those profiles into a propulsive and engaging portrait of modern Brazil.

Cuadros uses his portrait of the late media mogul Roberto Marinho, for example, to discuss how Brazil’s major media portray race, and through that, its ideas and ideologies of race. His chapter on Edir Macedo, a preacher in the “prosperity gospel” tradition, allows him to discuss changing religious practices. Although each chapter is built around a profile of particular billionaire, Cuadros includes accounts of his own reading as well as shoe-leather reporting. He visits community groups in the favelas and goes along on the $1500-an-hour helicopter rides his subjects use to avoid snarled traffic. The book may be more revealing than its subjects would like. In fact, it will not be available in Brazil: One of the billionaires in question was unhappy with what he saw in drafts and publishers got spooked.

The most important billionaire to the book is unquestionably Eike Batista. Eike, as he is known, rose as high as the global number 8 on the Bloomberg list of billionaires, valued at over $30 billion dollars. He was open about his ambitions to become the world’s richest man. Eike is a champion speedboat racer, has state-of-the-art hair implants, and was once married to Luma de Oliveira, a Playboy model and carnaval queen. One of their sons, Thor Batista, documents his enormous muscular torso on Instagram and, until not long ago, drove a Mercedes-Benz SLR McLaren valued at more than a million US dollars. Eike and his family could hardly be more representative of the billionaire playboy lifestyle of the global ultra-wealthy.

Eike also serves as a symbol of the problems of today’s Brazil, and about half of the chapters in Brazillionaires are devoted to him. In spite of what would seem to be fundamental differences in outlook and ideology, Eike forged a pragmatic working relationship with the governments of the center-left Workers’ Party. Until President Dilma Roussef was suspended from office by hostile legislators this May, the country had been governed by the center-left Workers’ Party since 2003, first under the metalworker and union organizer Luís Inácio Lula da Silva (2003-2011) and then under Dilma (2011-2016). Before Lula took office, Brazil’s wealthy worried about what would happen when a Lula, a former socialist, assumed power. Eike himself described it as a regression. But Lula was determined to break the association of left-wing rule with economic chaos, and built alliances with Brazilian oligarchs.

Lula embraced a developmentalist program that Cuadros describes as “wanting to bring the nation not so much into the twenty-first century, with tech and high finance, but into the twentieth, with ports, dams, and big, basic Brazilian companies.” Because Eike controlled a suite of interrelated companies, mostly in the mining and gas sectors, and had made big bets on offshore drilling, he received major loans from Brazil’s state-controlled development bank. He grew close to Lula.

Corruption is almost an expected part of business and political deals in Brazil, and Eike, though often portrayed as an “American-style”, “self-made” entrepreneur, was in no way exceptional. He helped finance a flattering biopic about Lula and spent quarter of a million dollars at an auction to purchase a suit Lula had worn to his inauguration. But in spite of evidence of corruption and conflicts of interest through the political system, for a time everyone seemed to be benefitting. Brazil’s economy made enormous strides. The middle class grew and quality of life standards among the poor improved dramatically. Malnutrition was cut in half. One of Lula signature programs, Bolsa Família, provides direct cash transfers to the poor, partially in exchange for children’s school attendance. Many of the billionaires Cuadros interviewed justified their wealth with some version of the “what’s good for GM is good for the country” argument. Most Brazilians found the approach acceptable: Lula left office with an approval rating over eighty percent.

But problems emerged by 2013. Brazil’s government and its consumers had taken on too much debt. Commodity prices were falling. Production forecasts for Eike’s offshore oil fields turned out to be insufficient to cover his costs, and his companies began to fold. His estimated net worth fell from $30 billion to negative one billion in just two years, and he found himself before the court, accused of insider trading. In 2012, his son Thor struck and killed a poor bicyclist in that million-dollar McLaren. Their trials seemed to be tests of whether the powerful could be held accountable for their actions at a time when ordinary people were suffering from deteriorating conditions and dashed hopes.

Throughout this story, Cuadros is critical of his billionaire subjects, but he doesn’t denounce them. In some of them that he finds admirable qualities. But he is aware that the myths told about them and that they tell about themselves are deeply damaging. The closest he comes to a putdown is when he asks employees of the office of Jorge Paulo Lemann (who became the richest man in Brazil after Eike’s fall, and owns Burger King, Budweiser, and part of Heinz), to name some “new thing” he had created, as an “entrepreneur” properly should. They didn’t respond with any examples, and he writes: “A recent Heinz investor presentation touted innovations that included yellow mustard and hot sauces. It’s like creative destruction without the creative part.”

Plenty of poor Brazilians, however, admire their rich, as Cuadros makes clear. Many in the middle classes direct their ire instead at the poor.  “Some of us, like you and me, have to work,” he is once told by his dentist:

“But we have these people who do nothing and get to live the good life.” When I asked her if she puts her money into CDBs—high-interest certificates of deposit—she said yes. She was surprised when I pointed out that this too was a public subsidy, a much larger one, since the government pays huge sums for banks to hold its bonds. I should have mentioned that three-quarters of the adults on Bolsa Família also work for a living.

If Cuadros has an agenda, it might be described as emphasizing the contingency of economic outcomes, as well the obstacles to mobility and access, all of which make the idea of meritocracy little more than a means of justifying extremes of inequality.

These issues—and these sorts of conversations about merit, welfare, and the distribution of wealth—are of course no means unique to Brazil. And if Brazillionaires is superficially about Brazil, it also aims to be about more than that. Brazil, in important ways, is more representative of the world than any other country. It has been, in recent decades, among the most unequal countries in the world. If you combine all of the world’s people together and measure inequalities of wealth, you get an even higher level of inequality than exists in any single nation. Still, it is Brazil’s profile that comes the closest to matching the global situation: a small, wealthy, and dominant upper class, a modest middle class, and a poor majority that struggles for both income and effective rights.

Brazil is unusual among high-inequality countries in that its citizens are spread across the entire spectrum. (In the United States, by contrast, in purely monetary terms the poor are middle-income by world standards.) Brazil has people who are as poor as anyone anywhere, and yet it also has people who are as rich as anyone anywhere. Only one of Cuadros’s subjects expresses any remorse about this: Guilherme Leal, cofounder of a sustainable cosmetics company, told Cuadros it made him uncomfortable to be a billionaire in a poor country. “I think the happiest societies are the least unequal,” he continued, 

where everyone can have a pretty decent, pretty reasonable quality of life. If I had to give up a significant piece of my wealth, thirty percent, forty percent, to higher taxes, but at the same time got to live in a country with less inequality, I would be happier.

Still, when his company was asked to pay hundreds of millions in unpaid taxes and fines, he said “Here in Brazil, if you don’t try to deal intelligently with the tax burden, you’ll go broke.” If Brazil’s inequality shocks the conscience, and leads to obvious injustices, then we must recognize that, as a global human community, we are all Brazil.

Cuadros doesn’t make that global comparison explicit, but he scatters breadcrumbs toward a third interpretation of his book. Even the subtitle of the U.S. edition: “Wealth, Power, Decadence, and Hope in an American Country” conspicuously does not say that “Latin American Country,” but “American.” The point, surely, is that these problems are not only Brazil’s, but also are those of the United States. Environmentalists in the U.S. may cry in dismay as enormous swaths of the Amazon are cleared for soybeans and cattle—Brazilian environmentalists do too. But such activity does bring short-term gains to poor areas of the country—and, as Cuadros points out, the U.S. has made the same calculus with fracking in recent years.

Both countries are former slave societies that struggle to confront legacies of institutional racism, and the violence that accompanies the pathologizing of a racialized poor. Both are places where the wealthy have the means to ensure that their children wind up prosperous, and benefit most even from public goods like education. Institutional corruption has its particular culture in Brazil, where it can be both a quotidian frustration and completely outrageous. (The judge overseeing Eike Batista’s trial for market manipulation and insider trading impounded some of his personal property, and was later caught driving Eike’s Porsche Cayenne.) But what of our completely legal practice of lobbying, in which government experience can be parlayed into private wealth, and corporations and the rich individuals have major influence over legislative outcomes? The history of our own powerful billionaires is not simply one of the production of social value, but also of bubbles, monopolies, inside dealing, and state and private violence against labor. The United States is much richer, and its democracy is older, but it is not so very different.

Because of the Olympics, Brazil is now the center of world attention. That the games come at a moment of political turmoil and economic recession is surely disappointing to the country’s leaders and many of its residents. But the legions of foreign journalists parachuting in for short visits will undoubtedly be drawn to the exotic: the beauty of the landscape and the people, soccer, Carnaval, the favelas, and so on. Brazillionaires is a reminder that viewers in the United States would be well-served not to look at Brazil as an exotic place with exotic problems. To contemplate its condition is to behold an alarming portrait, only to realize that our gaze is not directed at a painting, but a mirror.